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The first occupation of Lithuania by the Soviet Union

Ultimatum
Just before midnight on June 14, when world's attention was focused on capitulation of Paris, Molotov presented the ultimatum to Urbšys. It repeated the same accusations of kidnapping Soviet soldiers and conspiring with Latvia and Estonia. The ultimatum demanded:
 * 1) Put Skučas and Povilaitis on trial for ordering kidnappings of Soviet soldiers
 * 2) Form new pro-Soviet government (later known as the "People's Government")
 * 3) Allow an unspecified, but "sufficiently large" number of Soviet troops to enter Lithuanian territory

Russians demanded an answer by 10am on June 15, giving less than 12 hours to respond. The Lithuanian government debated the ultimatum during the night session. Chief Military Commander reported that mounting effective armed resistance, when Soviet troops were already in the country and the Lithuanian military was not mobilized, was impossible. Merkys and his cabinet resigned to make way for a new government, led by Stasys Raštikis. The session ended at 7am with a decision to accept all Russian demands without expressing protests or complaining about the aggression. Raštikis rationalized that it was not worth angering the Russians by expressing empty protests. By noon on June 15, the Lithuanians received a reply from Moscow that Raštikis was not a suitable candidate for the Prime Minister. The selection of another candidate would be supervised by Molotov's deputy Vladimir Dekanozov. Merkys continued to act as Prime Minister. Smetona, who continued to disagree with the majority of his government, decided to leave the country in protest and appointed Merkys as acting President. By late evening on June 15, Smetona and Minister of Defense Kazys Musteikis reached Kybartai and crossed the border into Nazi Germany, where they were granted temporary asylum.

People's Government
One of the main goals of Dekanozov was to arrange a puppet government that would legitimize the Soviet occupation. On June 16, the Lithuanian government, exceeding its authority, decided that Smetona's emigration was effective resignation and entrusted Merkys with full presidential powers. On June 17, Merkys appointed Justas Paleckis as the new Prime Minister and confirmed the new government, known as the People's Government. Then Merkys and Urbšys resigned; both of them were later imprisoned and deported to Russia. Paleckis took the role of the President and appointed writer Vincas Krėvė-Mickevičius as the Prime Minister. Thus Soviets took control of the Lithuanian government quazi-constitutional manner. The People's Government included several well-known politicians and public figures to reassure the public that the new government is not a tool of Soviet occupation, but a simple replacement of the old authoritarian Smetona's regime. The people saw it as destruction of the presidential power and not as loss of independence.

People's Seimas
On July 1, the People's Government dissolved the Fourth Seimas of Lithuania and announced show election to the People's Parliament to be held on July 14. According to the election law (adopted on July 5 violating the constitution), only communist organizations could propose candidates, but not more than one for each seat available in the parliament. After extensive electoral fraud, the official results showed that voter turnout reached 95.51% and communist delegates received 99.19% of votes. Officially, 39 of the elected delegates were members of the Lithuanian Communist Party and 40 were independents. During the first session on July 21, the parliament proclaimed creation of the Lithuanian Soviet Socialist Republic and petitioned the Supreme Soviet of the Soviet Union to accept this new republic into the Union. After a 20-member Lithuanian delegation presented its case in Moscow on August 1, the petition was accepted on August 3 making Lithuania the 14th republic of the Soviet Union. The occupation of Lithuania was thus legitimized.

Economic reforms
Immediately after the occupation, Russians started implementing various Sovietization policies. All banks (including all accounts above 1,000 litas), real estate larger than 170 m2, private enterprises with more than 20 workers or more than 150,000 litas of gross receipts were nationalized. This disruption in management and operations created a sharp drop in production, which combined with massive spending of appreciated rubles by Russian soldiers and officials caused massive shortages of goods. To turn small peasants against large landowners, collectivization was not introduced in Lithuania. All land was nationalized, the largest farms were reduced to 30 ha, and extra land (some 575000 ha) was distributed to small farmers. In preparation for eventual collectivization, farm taxes were increased by 50–200% and additional heavy in-kind consriptions were enacted. When farmers were unable to meet exuberant new taxes, some 1,100 of the larger farmers were put on trial. The Lithuanian litas was artificially depreciated 3–4 times its actual value and withdrawn by March 1941.

Cultural life
On July 1, all political, cultural, and religious organizations were closed. Only the legitimized Communist Party of Lithuania with some 1,500 members and its youth branch were allowed to exist.

Persecutions
Before the elections to the People's Seimas, Soviets arrested some 2,000 of most prominent political activists. These arrests paralyzed any attempts to create anti-Soviet groups. An estimated 12,000 were imprisoned as the "enemy of the people." On June 14–18, 1941, less than a week before the Nazi invasion, some 17,000 Lithuanians were deported to Siberia, where many perished due to inhumane living conditions (see the June deportation).